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BHP Billiton
’s board is considering four internal candidates as it looks to appoint a successor to chief executive officer Marius Kloppers in the next 12 to 18 months.

The Australian Financial Review understands the company has also hired the British branch of Heidrick & Struggles to examine external candidates.

Mr Kloppers has been at the helm of the world’s largest mining company for five years, which is longer than his three immediate predecessors. His record is viewed as mixed, with investors praising his commodity marketing skills but raising questions over BHP’s project management and string of failed acquisition attempts.

In July, the Financial Review reported that his ratings in the Corporate Confidence Index, which surveys investors and analysts, had been declining and no clear succession path had been outlined.

Since then, the four internal contenders – non-ferrous head Andrew Mackenzie, ferrous and coal head Marcus Randolph, aluminium and nickel boss Alberto Calderon and petroleum boss Mike Yeager – have been meeting with investors more than was previously typical.

But fund managers said the ranking of the various internal candidates remained unclear.

“In the past there have probably been standouts,” Pengana Global Resources Fund portfolio manager Tim Schroeders said. “But I struggle in finding out who is the standout at this stage.”

Impressed by Marcus Randolph

One analyst and one fund manager noted they had been particularly impressed by Mr Randolph in briefings last week. He had been privately flagging plans to retire in recent months but has since appeared to have changed his mind.

“Given the business is not on its knees [Mr Kloppers’s replacement] is more likely to be internal,” another fund manager said.

Former BHP chief financial officer Alex Vanselow exited last year to search for a CEO role. He has since been viewed as a top contender for that job at Anglo American, which is seeking a replacement for current boss Cynthia Carroll.

External candidates for the BHP role are expected to include senior executives at major mining and petroleum companies. Rio Tinto chief financial officer Guy Elliott, who has said he will depart that company by the end of 2013, is well regarded by the market and viewed as a possible contender. However, he is also in line to be the next chairman of Royal Dutch Shell, which would not be possible if he took on the BHP role.

Other potential external candidates could include senior executives at BG, such as executive vice president Ashley Almanza or chief financial officer Fabio Barbosa.

Australian-born CEO of The Dow Chemical Company, Andrew Liveris, was the top external contender when BHP conducted a search to replace Chip Goodyear but he ultimately lost out on the top job to Mr Kloppers. He could be considered again in this round.

Mick Davis a long shot

Xstrata chief executive Mick Davis, who expects to exit that company six months after a proposed merger with Glencore International is completed, is not expected to be a candidate for the BHP job.

“I think the BHP culture is very distinct and the company has its own way of doing things and it would be better to find someone internally,” Global Mining Investments chairman John Robinson said of the potential to appoint Mr Davis at BHP.

Others speculated Australian-born AngloGold Ashanti CEO Mark Cutifani could be a candidate, but one source suggested he was not expected to be.

In the last succession battle at BHP, senior executive Chris Lynch lost out to Mr Kloppers and departed the company soon after. Both had been appointed as executive directors more than a year before, then chief executive Chip Goodyear formally announced his departure and many investors expect a similar process could take place this time around. At present, Mr Kloppers is the only executive director on the company’s board.

BHP declined to comment on the search for a replacement for Mr Kloppers but a spokeswoman emphasised the importance of succession planning as a “critical task” facing the board on an ongoing basis.

“BHP Billiton’s board has always ensured that it has a well-integrated, continual succession process in place for our most senior executives,” she said.